6
CapitalPress.com
October 27, 2017
Editorials are written by or
approved by members of the
Capital Press Editorial Board.
All other commentary pieces are
the opinions of the authors but
not necessarily this newspaper.
Opinion
Idaho potato growers
weigh options for
boosting fry profi ts
Editorial Board
Editor & Publisher
Managing Editor
Joe Beach
Carl Sampson
opinions@capitalpress.com Online: www.capitalpress.com/opinion
O UR V IEW
By CHUCK STADICK
For the Capital Press
F
or the past several years,
grower margins have
consistently declined in
Idaho to the point they are no
longer suffi cient to maintain a
stable business environment
for growers’ long-term fi nan-
cial future. For the four-year
period including crop years
2014 through 2017, pricing
has plummeted 7 percent
(down 70 cents a cwt.)
Processors use the bar-
gaining group to set an ad-
vertised price and then pres-
ent growers with different
options to leverage an even
cheaper raw product price.
Some growers have been of-
fered multiple-year contracts
at a discounted price. Others,
a joint venture where profi ts
are split between the producer
and the buyer.
However, the majority of
growers still sell their crop on
an annual agreement where
the grower takes all of the
risks with more and more
contract language that leaves
the grower vulnerable to re-
jection and reduced pricing
for the slightest quality vari-
ance.
The question needs to be
asked whether these multi-
year contracts make sense for
the grower and the industry
as a whole given the current
demand for frozen potato
products from a domestic and
global perspective.
In my opinion, both of
these “off contract” alterna-
tives guarantee a raw product
supply for the processors’
production needs and also
provide them with signifi cant
leverage for fl at or reduced
pricing since a portion of their
raw potato requirements are
guaranteed from year to year.
Some processors are more
aggressive on both pricing
and acreages than others.
Where do these multi-year
purchasing programs leave
the potato industry in Idaho
and the Pacifi c Northwest?
The answer is the current
situation in Idaho and Wash-
ington, where the grower or-
ganizations have little or no
leverage for their members to
provide fi nancial sustainabil-
ity and suffi cient profi tability
to invest in the future.
Looking at the fi nancial
data that is available, proces-
sors are currently enjoying
record profi tability and the
motivation from stockhold-
ers and senior management
is to continue this trend.
Meanwhile, the grower base
continues to diminish with
larger operations taking over
the supply chain even at
the sacrifi ce of raw product
quality.
The
Quick
Service
Restaurant chains (QSRs)
realize the effect of this dy-
namic with their French fry
prices increasing based upon
demand and a tight capacity
situation resulting in uncer-
tainty of potential supplies for
the future. So, fi nished pric-
ing moves higher while raw
product concurrently moves
lower. That is the recipe for
windfall profi t-taking and this
will continue as long as the
industry’s demand is ahead
of processing capacity, espe-
Guest
comment
Chuck Stadick
cially when you consider the
global marketing programs.
There is also the potential,
with all of the new capacity
being added in the Pacifi c
Northwest, for excess pro-
cessing capacity in the future
and this would make it even
more diffi cult for the grower
to survive.
So, what can the grower
community do to “right the
ship” and secure their fi nan-
cial future? Sticking your
head in the sand and waiting
for a poor crop year to make
a market is not a strategy.
The industry could say no to
the multi-year agreements
that guarantee the processors
a signifi cant portion of their
raw product supplies annual-
ly. Perhaps the larger growers
could have the discipline to
reduce acres to promote in-
clusivity with smaller grow-
ers to maintain the quality
the industry needs. Or fi nally,
there is the scenario whereby
growers individually nego-
tiate their own deal with the
processors, similar to the chip
industry. Perhaps not the most
attractive set of alternatives,
but that is the reality of our
industry today.
It’s obvious that if Idaho
had an increase in processing
capacity, acreage would be in
high demand and that would
give the bargaining associ-
ation more leverage. There
has been some movement by
both out-of-state processors
and French fry customers to
determine what can be done
to offset the diminished prof-
its in their arena. SIPCO has
started a dialogue with both
to determine if this is feasible
in Idaho.
The intent is to position
the SIPCO group to be their
primary raw suppliers. Due
to the confi dentiality of this
dialogue, we can’t announce
the companies that might par-
ticipate with us in creating a
more stable pricing program
that will be sustainable in the
future. The cost plus method
of pricing has been discussed
and this could be the solu-
tion to make sure both cus-
tomers remain solvent in the
industry.
This would be a big un-
dertaking. However, our
industry has thrived on inno-
vation and resourcefulness.
We do not begrudge the pro-
cessors making a fair profi t.
However, SIPCO is commit-
ted to making sure the grow-
ers receive the same fairness
as our valued end users in the
French fry industry.
As part of my new role as
executive director of SIPCO,
it is one of my primary goals
to reach out to all of the con-
tract potato growers in Idaho.
It is my opinion that contract
growers must come together
if they are to claim their fair
share of the $23 billion glob-
al market for frozen potato
products. Growers’ opinions
and comments are invited.
Chuck Stadick is execu-
tive director of the Southern
Idaho Potato Cooperative,
SIPCO.
Don Jenkins/Capital Press
Washington hemp entrepeneur Cory
Sharp takes photos at a hemp planting
June 6 in Moses Lake. Sharp said Oct.
9 that the hemp has been harvested, but
he’s still looking for a market.
Hemp dilemma
leaves farmers in a lurch
C
ory Sharp of Moses Lake,
Wash., has a problem, and it’s
a big one.
He has as much as 80,000
pounds of hemp seed from a 75-acre
crop he planted in June. He’d like
to crush them for their oil, but no
facility exists in Washington for that
purpose. He can’t cart them across
state lines, or into Canada, where
facilities exist, because the crop is
illegal under U.S. law.
Hemp, like marijuana, is a
cannabis plant. Unlike its cousin,
hemp contains very low amounts
of THC, the chemical that
produces the “high” in marijuana.
Nonetheless, it is classifi ed as a
Schedule I controlled substance and
lumped in with the likes of heroin,
LSD and ecstasy.
That was not always the case.
Hemp has been grown for fi ber
for centuries. Colonial Virginia
required its cultivation in 1691 and
it became an American staple until
the 20th century. By the 1930s it
had been lumped together with
marijuana and made illegal by most
states — some say at the bidding of
cotton interests.
During World War II the federal
government encouraged farmers
to grow hemp to replace jute and
other fi bers from Japanese-held
areas in the Pacifi c necessary for
the manufacture of rope. The plant
proved so prolifi c that farmers in
the Midwest still struggle to stamp
it out of ditches and fence rows
more than 70 years later.
States that have recently moved
to legitimize pot under provisional
legal cover from the Department of
Justice have also moved to allow
commercial hemp production.
As we’ve said before, we have
no moral objection to hemp. Hemp
is to marijuana what a poppyseed
muffi n is to heroin. That it remains
illegal under federal law is our only
problem with hemp.
And that’s Sharp’s problem,
and the problem of all growers.
The wink-and-nod protections
they receive from their states are
suffi cient to bring a crop to harvest,
but insuffi cient to guarantee
commercial prospects.
There is no doubt that hemp
is commercially viable. Imported
hemp products — oils, foodstuffs
and fi ber — are widely available
in shops large and small across the
country.
The limitations placed on Sharp
and his fellow hemp growers were
not unforeseeable. It would have
been better to wait until Congress
had lifted the prohibition. But the
cart is already before the horse.
There are efforts being pressed
by members of the congressional
delegations of states that have
legalized recreational and medical
marijuana to change the law and
decriminalize cannabis. We have
never embraced “legal marijuana,”
but we don’t see any reason hemp
should be classifi ed as a controlled
substance.
Readers’ views
Climate argument
lacks support
I congratulate the editors
for their parody of a guest ed-
itorial, in which they present-
ed a caricature, M. Reynolds
(Oct. 20), a lobbyist who, if
he existed, should seek another
line of work, writing on “clean
power” and the need to “price
carbon,” attributing recent hur-
ricanes and California fires
to climate change and carbon
emissions.
This was cleverly done, mock-
ing environmentalists and their
faulty reasoning and poor sci-
ence, when no real scientists
attribute recent events to such
causes.
We all know these are scare
tactics, meant to frighten children
and those who cannot or will not
think. Pretending to advocate to
prevent “climate change,” the ar-
ticle advocates more government
and more taxes.
Raising taxes and more gov-
ernment are Democrats’ and “en-
vironmentalists’” answer to every
problem.
When Congress “fails to act,”
that means there is no consen-
sus — Congress has decided
not to do something. When only
60 Members support a cause,
that means there is no real sup-
port in a House of 435 Mem-
bers (not even a third of the 194
Democrats).
Fourteen percent of the House
of Representatives is nothing.
When Obama imposed car-
bon taxes by regulation because
Congress “failed to act,” that was
still another example of uncon-
stitutional lawmaking by regu-
lation because, even in a Demo-
cratic Party-controlled Congress,
Obama could not find sufficient
support for his policies, which the
Trump administration is now re-
scinding.
How clever to say that the
Obama Clean Power Plan (his
“legacy” for which he could not
even find support in his own par-
ty) was “gutted” when it never
found more than minor support,
and never has been a rational or
good policy.
Neither the Kyoto Protocol nor
the Paris Climate Accord even
won support in Congress, in part
because everyone knows they will
harm the U.S. without affecting
the climate.
How clever to call some-
thing “bipartisan” when it
has no real support in either
party.
The only “bipartisan” aspect
was that both parties rejected
them and Obama’s rules. Carbon
pricing is an idea only supported
by a very few.
Most editorials make valid ar-
guments for this or that position.
The Capital Press was clever to
mock climate change and carbon
taxes by such a caricature of rea-
soning and evidence.
Alan L. Gallagher
Canby, Ore.